The bulk of that debt – about $5.13 million – goes to the middle school to pay for locker room renovations and HVAC for both gyms. In order to finance that debt, the county is selling general obligation school bonds to the Virginia Public School Authority. Though interest rates vary until they are locked in, estimates based upon the past six weeks put the rate at around 2.81 percent. The yearly payments on the debt, therefore, would be around $420,000.
The remainder of the debt will supply the county with funds to purchase a $575,000 fire truck. By paying for the truck in advance this November, the county will secure a $25,000 discount; it will receive the truck next May. The county is financing this debt through the Virginia Resources Authority at an estimated interest rate of around 2.05 percent and an estimated yearly payment of $65,300.
Supervisors also unanimously decided to refinance current debt. By refinancing the $1.75 million still owed on the library building and the $1.86 million still owed on the new courthouse, supervisors expect to see an estimated $429,000 in savings over the life of the loan. Financing for the fire truck will be lumped in with the refinancing of this current debt.
Going this far into debt, however, puts the county further into conflict with its own debt policy, which states that the ratio of governmental fund debt services expenditures as a percent of total governmental fund operating revenues should not exceed 12 percent. As of June 30, 2013, the county’s debt service ratio was already 15 percent. Adding the middle school renovations and new fire truck into the mix push the ratio to 17 or 18 percent, said County Administrator Steve Nichols, and that’s before financing for water comes down the pike.
“This [new debt] is not going to improve that position,” Nichols warned supervisors, “but there’s not much you can do about it.” He also noted that the 12 percent limit was an internal county policy, not state law.
“We’re well below the threshold where bond agencies start to change your ratings,” Supervisor Tony O’Brien responded, “and while it’s appropriate to have a conservative number on our threshold, if we’re actually saving money in the long run [it’s worth it].”
Fluvanna County’s bond rating rose from AA- to AA last spring, Nichols told the Board. “One of the reasons it changed was because of the additional projects planned, the infrastructure projects,” he said, “because that was considered to be part of progressive plan managing our cash. They didn’t express a lot of concern about this [ratio]. I just want to make sure that every time we put another debt issuance in front of you that you understand what policies we have in place, where we are on that, because it is getting to be a heavy load. You all are aware of that.”
“Sometimes you do have to spend money to make money,” commented Supervisor Don Weaver. “But 17 percent. When are we going to stop? When are we going to stop spending?… I’m not sure that the public understands where this Board is and where past Boards have gotten us to. Past Boards have gotten us to where we are today, and we’re just forced to make some of these decisions, whether we want to or not. That’s what bothers me.”
“When we say Boards put us in these positions, to me it says Boards did what they thought was right,” countered Chairperson Mozell Booker. “I’m not going to blame the other Boards because I know when they sat here they wanted to do things that were right.”
Regardless of their feelings regarding increasing the county’s debt ratio, all five supervisors thought the middle school renovations and purchase of the fire truck were necessary expenditures, and the motions passed 5-0.
The Board also approved a rezoning request and special use permit so that the Lafayette School, currently in Charlottesville, could relocate to Fluvanna County at Zion Station Drive off Rt. 250 just west of its intersection with Rt. 15. The Lafayette School is a private nonprofit school that serves children and adolescents with emotional and behavioral problems
